FNMA and Request for Promissory Note???

Hi All -

I have a shortsale listing and the servicer is PHH, but it is a Fannie Mae loan. 

We originally listed property in February-2014 for $129,900 (seller would not be short if we sold for this value).  We did not get any offers and seller finally decided that he MUST do a short sale, so in June-2014, we reduced price to $119,900.  Still no offer or activity.  So, 2 weeks later we reduced price to $113,900.  Soon after, we got an offer for $112,000 from an owner occupant, but it was a CASH offer.

All financials had been submitted, so we got a HUD1 and submitted the offer.  My first contact with negotiator was July-8 and he told me he need updated paystubs and a couple of other things and then he would submit to Fannie.  Got him everything he needed by the next day.

Today, I get a counter @ $121,000 and they want a promissory note from seller for $10,000, 0% interest, payable over 5 years @ $83.33/month.  (GREAT TIMING, BAD ANSWER)

So, my question is this - has anyone else seen a requirement for a promissory note - in ARIZONA???  I think this is crazy - especially because I don't think at $131,000 (121,000 + 10,000 promissory note) we are short at all.

Does anyone have the latest Fannie Mae valuation dispute paperwork?

 

HELP!!!

 

Thanks, CAT 

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Replies to This Discussion

Permalink Reply by Kevin - Greenville, SC on July 15, 2014 at 8:11am
Permalink Reply by Kevin - Greenville, SC on July 15, 2014 at 8:14am

  1. PROMISSORY NOTE TEST AND FORMULA

    The servicer must evaluate a borrower for a promissory note if the borrower’s future debt-to-income ratio (“back-end ratio”) is less than 55%. The servicer must calculate the borrower’s debt-to-income ratio based on…

https://www.fanniemae.com/content/announcement/svc1219.pdf

Permalink Reply by London Cox on July 15, 2014 at 9:17am
I wouldn't worry about submitting a valuation dispute. If the value was that much higher than the actual offer, they would have countered the contract price and would not be demanding a note from the borrower.

What has likely occurred is that something in the borrowers hardship package (extra monthly income, cash on hand, etc) has Fannie convinced that the borrower has the ability to take on that note. We refer to it in my office as the "just because" fee.

There are two pieces of good news here though; Fannie will usually accept a few thousand in cash at close in lieu of that note and they do not care where those funds actually come from.

We usually place the onus on the buyer first and tell them that the investor is demanding a cash contribution at close in addition to the current contract price. Tell them the investor is looking for $10k but that you can likely get them to agree to $2-4k. Have the HUD revised to show a "cash contribution to investor" of $2k shown and added to the lender net and submit it to your negotiator, explaining that it is being offered in lieu of the promissory note. Worse case they might come back looking for $3k or $4k, but it almost always works.

If the seller refuses to ante up, those funds can also come from any other party to the transaction.

Hope this helps.

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